In a clear rebuff to the Obama administration, the Senate approved a defense bill amendment for tough sanctions targeting the Central Bank of Iran. Administration officials are warning that the measures could undermine international cooperation against Iran.

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

GUY RAZ, HOST:

And I'm Guy Raz. In the Senate today, Republicans and Democrats alike are defied the Obama administration's advice by passing legislation that targets Iran. The measure is aimed at punishing foreign institutions that do oil-related business with Iran's Central Bank. The White House says the move could undermine efforts with U.S. allies to target Iran, but the Senate apparently disregarded that warning.

NPR's Tom Gjelten reports.

TOM GJELTEN, BYLINE: In a Senate hearing this morning, the Democratic sponsor of the sanctions proposal, Robert Menendez of New Jersey, defended the legislation by citing an administration letter which said the sale of Iranian oil lines the regime's pockets, sustains its human rights abuses and feeds its ambitions like no other sector of the Iranian economy.

SENATOR ROBERT MENENDEZ: Well, then if that is the fuel that allows Iran's – its march to nuclear weapons, then you need to cut off the fuel and that's exactly what we are focused on doing.

GJELTEN: Menendez was speaking to the Treasury Department's undersecretary for financial intelligence, David Cohen. He was angry because he and his Republican co-sponsor, Mark Kirk of Illinois, had modified their sanctions proposal in order to address administration concerns, only to have the administration say it still opposed the legislation.

The legislation would bar foreign banks from operating in the U.S. if they're also doing business with the Central Bank of Iran in order to buy Iranian oil. The risk in going after Iran's oil exports is that if global oil supply is reduced oil prices could go up and further weaken the global economy.

As modified, the Menendez-Kirk proposal allows the president to waive the sanctions if he finds the global oil supply in jeopardy. But David Cohen today raised another concern, that by penalizing banks in allied countries that still do business with Iran, the international effort against Iran could suffer.

DAVID COHEN: There's a danger that it will result in less cooperation because of the reaction to the threat that's being visited on their financial institutions.

GJELTEN: Less cooperation because U.S. allies might get annoyed if the U.S. government tries to penalize their banks, but that warning fell on deaf ears, even among Democrats on the Senate Foreign Relations Committee. Every one of them spoke in favor of the amendment. That put the administration in an awkward position, opposing a measure just as it was headed for passage.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.